The Real Price of Farmed and Wild Cod

However, kyst.no reports that the brief price rise has not been sustained and that prices now continue to tumble with a further loss of NOK 1.49/kg this week. Prices for farmed cod are now just a little higher, at NOK 25.68/kg, than their lowest point in 2008.

This is not good news for the cod farming industry, reported reLAKsation this week. Aquaculture analyst Klaus Hatlebrekke told IntraFish that warning lights are flashing from all directions with the market price well below the cost of production. Despite such problems, Mr Hatlebrekke believes that most cod farming companies will weather the storm. How true this will prove to be will ultimately depend on the actual cause of the storm.

Mr Hatlebrekke is not pessimistic of the future of cod farming in the long term, a view that seems to imply that part of the problem at least, is of a current world picture painted in red. We, at Callander McDowell, are not so sure. Yes, the current economic climate is not making it any easier for cod farmers but when salmon farmers talk about their produce as recession proof, it would be thought that cod should be no different. After all, the food industry should be the last to suffer when money is tight because people still need to eat.

Our view is that the real problem for cod farmers, which would still be a problem irrespective of whether there’s a recession, or not, is the availability of wild cod.

Cod has always been popular with consumers. In Britain, it has been the mainstay of the fish and chip shop in most of the country (some areas prefer haddock) for as long as can be remembered. Cod would have been the ideal candidate species for intensive farming but was never really considered. Instead, the industry targeted salmon, then turbot and halibut before turning its attention to cod. The reason why is simple to understand. Stocks of wild fish were bountiful, meaning the fish was both widely available and cheap to buy so there was no commercial logic to farming cod.

However, all that changed when the environmental lobby warned that widespread over-fishing now meant that fish stocks were on the point of collapse and that cod was in danger of disappearing from the menu. Suddenly cod farming began to make sense. The collapse of wild stocks would make farmed cod not only desirable but also capable of producing the necessary price premium needed to offset the high cost of production. Cod farming suddenly boomed but just as commercial volumes have started to gain momentum, the realisation has hit home that cod stocks have not only not collapsed, but they are actually increasing.